Coupon Remedies in Antitrust Cases: The Form of the Discount also Matters

DOJ Economic Analysis Group Discussion Paper No. 03-3

17 Pages Posted: 25 Jun 2003  

Fred Gramlich

Antitrust Division - U.S. Department of Justice

Date Written: February 10, 2003

Abstract

Buyers injured by price fixing may file damage actions which often end with cash compensation to the injured. Compensation in the form of coupons (or scrip) has been growing since 1975, however, despite the fact that a wide variety of market and redemption characteristics can affect the (lack of) worth of scrip in the post-settlement period. This paper analyzes, in a representative framework, how three different monetary forms that scrip can take affect the way scrip performs. It finds that scrip which gives a fixed absolute money discount off price (rather than either a percentage discount or the right to buy at a defined price) performs worst. It provides the least compensation to the injured scrip-receiving buyers, the most injury to non-scrip-receiving buyers, the lowest level of deterrence to price fixing, and it harms the efficiency of that product market. The paper also finds that 90% of the $1.22 billion in scrip issued since 1975 in 36 identified settlements is of this fixed absolute money discount form.

Keywords: coupon, scrip, antitrust, remedies, discount, form

JEL Classification: K13, K21, K41, L11, L40

Suggested Citation

Gramlich, Fred, Coupon Remedies in Antitrust Cases: The Form of the Discount also Matters (February 10, 2003). DOJ Economic Analysis Group Discussion Paper No. 03-3. Available at SSRN: https://ssrn.com/abstract=400320 or http://dx.doi.org/10.2139/ssrn.400320

Frederick W. Gramlich (Contact Author)

Antitrust Division - U.S. Department of Justice ( email )

600 E Street NW
Room 10-807 BICN
Washington, DC 20530
United States
202-307-6379 (Phone)
202-307-3372 (Fax)

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